Robust Routing Plays a Critical Role in Omni-channel Fulfillment

home-deliveryThe most dynamic form of routing is focused on e-commerce home deliveries. Ken Wood, the EVP of Product Management at Descartes, said “traditional retailers want to be competitive with the Amazon’s of the world. We are seeing movement from very big retailers to leverage infrastructure and fleets as a competitive weapon.”

Doing e-commerce routing well requires more than just transportation management software (TMS). Most retailers will need a robust distributed order management (DOM) solution to designate the most cost effective flow path to the customer and to insure there is inventory available to complete the order.

Then the routing solution needs to be integrated to an e-commerce platform so that potential buyers can see their delivery options prior to checkout. When they check on delivery options, there needs to be sub second response times.

When the delivery is made, mobile devices and mobile resource management systems give drivers special delivery instructions, and allow them to capture a consumer’s signature. And mobile tracking of the trucks allows the customer to be informed if a delivery is apt to be late.

But in the middle of all this is the routing solution. And the importance of routing starts right at the point of purchase on a web site. The choices given to consumers from the routing engine should help to maximize profitability for the retailer.

Chris Jones, the EVP of Marketing and Services at Descartes, made this point in a Logistics Viewpoints article on home deliveries, “Not all customers or orders are created equal so why not offer home delivery options that way too? For instance, your ‘type A’ customers get more delivery options than your ‘type C’ customer. The second is the use of dynamic pricing. Some times of the day or days are more valuable than others. In addition, the cost to deliver can vary greatly based upon the customer’s location, order and all of the other deliveries that need to be made. Uber with its surge pricing has already done some of this, why not retailers?”

The routing engine continues to adjust the plan. By end of day Monday, a retailer may know of 15 orders to be delivered in an area the following Sunday. By Sunday, an additional 100 orders may have been dropped for delivery on that day. At POS, the engine continues to use strategies to get customers to pick more profitable delivery windows – by displaying the most profitable slots first, by charging more for quicker deliveries, or by labeling a time slot as environmentally friendly. And as customer’s get reminders of their deliveries in the coming days, as many as 10 percent will change their delivery time. But to maximize efficiency, as slots continue to be selected and changed, the optimization engine continues to swap orders from one route to another.

The routing engine needs to continue to keep planning until the day’s deliveries are complete. Route planning benefits from having the location data integrated to the routing. As David Shaw, the Strategic Partnership Manager at Paragon Software Systems points out, “interfacing telematics allows the actuals to be fed back into the routing engine. This enables planners to be made aware of exceptions. No matter how well you plan, the plan unravels based on traffic.”

Kevin Haugh, the Head of Product Strategy for Omnitracs, made the point that mobile driver assistance apps have access to real time traffic data and relevant points of interest – where a driver might fuel up, for example – but that routing solutions are pretty early in their journey toward being able to incorporate this kind of information into their route plans.

Finally, there is a line of thinking that you don’t stop planning today’s routes at the end of the day. James Stevenson, the Vice President of Sales at TMW Systems says that TMW is doing research around having the routing solution compare the results of what was delivered the previous day or week with multiple scenarios of what could have been accomplished if constraints had been relaxed. For example, the optimized solution was premised on scheduling the drivers for eight hours of work. What if the solution allows drivers to work up to 10 hours? How much could have been saved? How much could be saved if we relaxed certain accounts’ delivery time windows?

In conclusion, most retailers don’t think of themselves as supply chain companies. But if they want to offer home delivery, they need to learn to route efficiently to protect their market share while competing profitably.

ARC updated its Transportation Management System Selection Guide to include more fleet management features, including advanced routing functionality.

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